A bearish scenario in Nornickel stock looks more likely

At the previous trading session decreased by 1.38%, closing was at 26,172 rubles. The paper looked at the level of the market, which lost 1.16%.

Nornickel shares continued to decline in the first half of Friday's trading amid weak market sentiment. At the moment quotations almost reached the level of 200-period moving average on the hour meter, but by the end of the day they managed to win back some of the losses.

The short-term technical picture is neutral. The bulls under the pressure of unfavorable external background could not break through the upper border of the sidewall - 26,600 rubles. The lower consolidation boundary is near 25,400-25,600 rubles, but even higher is the 200-period moving average, which might be a good support for the shares. Until it breaks down or one of the boundaries of the lateral consolidation is broken down, it is hard to expect large-scale movements in the stock.

On the medium-term horizon, sellers' forces prevail. On the daily timeframe RSI has a noticeable bearish divergence, and the oscillator itself is out of overbought territory. Weekly interval is overheated, but there are no signals for a deeper correction yet. Thus, under the circumstances, the development of the bearish scenario looks more probable in the coming weeks. Nevertheless, it is too early to make final conclusions, a more reliable signal to deepening of correction may be a breakdown of 25,400 rubles.

The external background is neutral this morning. The US indices after our close on Friday remained at approximately the same levels. Asian stocks are trading mostly in positive territory today. Futures are up 0.4%, down 0.1% and near the $55.3 level. All this gives reasons to assume that if the external background remains, the opening will take place near the previous day's close or slightly higher.

Since 2009, Nornickel shares have been in a big up-trend. Growth impulses alternate with periods of sideways consolidation, and drawdowns are quickly redeemed, indicating the strength of the trend. The last period of prolonged sideways consolidation was observed from early 2015 to November 2018. Quotes came out of another sideways upward sidewall, and since then the stock has grown about 1.5 times, supported by the growth of prices for Nornickel's key products.

The threat of the coronavirus spread led to a large-scale decrease in quotations in March 2020. In late May, an accident occurred at CHPP-3, owned by Nornickel. The accident caused the stock to pull back again, laying the risks of significant financial consequences for the company. As a result, the securities were once again in a broad saw.

In November 2020, a new wave of growth began, within the framework of which another powerful growth impulse was developed - the historical maximums were updated. Despite the local overbought situation, the long-term view on the securities is generally positive.